Slow China recovery hits global copper market

China’s slow economic recovery poses problems for the global copper industry and producers in Latin America.

Normally, China is the world’s biggest copper consumer and imports 54% of global refined copper, mainly from Chile, Peru and Mexico. Between October 2021 and February 2023, copper imports fell 4.27%, according to the Observatory of Economic Complexity.

Demand continued to decline in March, Chile’s copper commission Cochilco reported.

China's government eyes GDP growth of 5% this year, after last year's 3%, the lowest figure since the 1970s.

“Analysts have anticipated a quick recovery. It is too soon to assume that China is recovering. We are just starting the recovery,” Jinny Yan, chief economist at ICBC Standard Bank, told the CRU World Copper Congress, which took place in Santiago on April 17-19.

China uses a large part of copper for construction, but the sector has been affected by strict pandemic policies. Copper consumption could increase as the country’s decarbonization is gaining traction, as it requires changes in transport, energy, industry, urbanization and water systems.

Supply chain diversification poses another problem, Yan said. The US, South Korea and Mexico are among countries that plan to reduce dependence on China, so the government deems it essential to reactivate domestic consumption and trade.

But exports were down 10.2% year-on-year and imports 6.5% in January-February, while the economy is still reeling from zero-COVID policies. Only large companies are showing signs of recovery.

Global copper supply could expand this year as brownfield projects in Latin America start production, but regulatory and social risks in Chile and Peru, which account for almost 40% of global supply, have increased market uncertainty.

Photo: Jinny Yan (left) during the CRU World Copper Congress